New Delhi, July 29 -- Systematic Investment Plans (SIPs) are promoted as one of the most disciplined ways to invest in mutual funds. By investing a fixed amount at regular intervals, investors can avoid the need to time the market. However, SIPs are often misunderstood as a complete risk-management strategy.

According to Aditya Agarwal, Co-Founder, Wealthy.in, SIPs only address entry-timing risk and do not protect investors from other critical risks such as overvalued markets, concentrated portfolios, liquidity issues, or poor fund selection.

"SIPs are one of the most effective tools for reducing entry-timing risk through rupee-cost averaging, but they should not be mistaken for a risk-management strategy in themselves," Agarwal said. ...